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AC/113 AC113 AC 113 UNIT 8 QUIZ

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AC 113 UNIT 8 QUIZ 1. Question : A machine was purchased for $45,000. It has a useful life of 6 years and a residual value of $6,000. Under the straight-line method, what is the annual depreciation expense? Student Answer: $7,500 $15,000 $3,750 $6,500 Question 2. Question : A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8-year economic life. The amortization would include a(n): Student Answer: increase in amortization expense for $33,500 increase in research and development expense for $670,000 decrease in Patent for $83,750 increase in Accumulated Amortization for $670,000 Question 3. Question : A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The sale would include a(n): Student Answer: increase in Accumulated Depreciation for $36,000 decrease in Delivery Truck for $11,500 increase in a loss for $6,500 increase in a gain for $6,500 Question 4. Question : Pansy Co. purchased a $50,000 truck on January 1, 2011. The truck will be used for 40,000 miles and has a $2,000 residual value. If Pansy drives the truck 12,000 miles during 2011 and uses the units-of-production method of depreciation, what is the depreciation expense for the year ended December 31, 2011? Student Answer: $14,400 $15,000 $12,500 Cannot be determined from the information given Question 5. Question : Which of the following factors are used in computing depreciation expense? Residual Value, Useful Life, Market Value, Initial Cost? Student Answer: Yes, Yes, No, Yes Yes, Yes, Yes, Yes Yes, No, No, Yes No, Yes, Yes, No

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